FINAL NOTICE

1.
ACTION

1.1.
For the reasons given in this Final Notice, the Authority hereby makes an order

prohibiting Mr Flowers from performing any function in relation to any regulated

activity carried on by any authorised or exempt persons or exempt professional

firm, on the grounds that he is not a fit and proper person.

2.
SUMMARY OF REASONS

General background

2.1.
On 29 May 2009 Mr Flowers was granted Approved Person status as a Non-

Executive Director by the Authority. Subsequently, between 15 April 2010 and 5

June 2013 Mr Flowers was Chair of Co-op Bank, at the material times a

subsidiary of Co-op Group, one of the UK’s largest mutual businesses and owned

by millions of UK consumers. Mr Flowers ceased to be an Approved Person on 5

June 2013.

2.2.
Both during his time as Chair and afterwards Mr Flowers has demonstrated that

he lacks the fitness and propriety required to work in the financial services

industry.

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Integrity and Reputation

2.3.
A Chair occupies a special position of trust and influence. In particular, the Chair

plays a central role in facilitating the important support and challenge by the

Board of management, and has a responsibility to demonstrate high standards

of integrity, probity and ethical leadership. Further, as a director of Co-op Bank

Mr Flowers had agreed specifically to uphold high standards of conduct

consistent with the values of the Bank.

2.4.
Mr Flowers failed to discharge his responsibilities and demonstrated disregard

for the standards and requirements that he was expected to meet. The manner

and degree to which Mr Flowers fell below the standards required of him – in

particular during the period in which he held this position of trust and influence

– makes his failings sufficiently serious to warrant a prohibition.

2.5.
Specifically, Mr Flowers, whilst Chair of Co-op Bank:

(1)
on several occasions in the period 22 May 2011 to 16 June 2011, used his

work mobile telephone for personal use to call a premium rate chat line, in

breach of the Co-op Group Expenses Policy. In July 2011 he received a

warning from the Co-op Bank about his telephone use. Mr Flowers

apologised for his ‘foolishness’ and was required to repay all costs

incurred; and

(2)
on several occasions in the period 27 February 2012 to 22 November 2012

and 14 April 2013 to 5 June 2013 used his work email account to send and

receive sexually explicit and otherwise inappropriate messages and to

discuss illegal drugs, in breach of the Co-op Group Code of Conduct for

Directors and the Co-op Group Computer Use Policy.

2.6.
After Mr Flowers had left office he was convicted for possession of illegal drugs,

the penalty for which was a fine of £400 from Leeds Magistrates’ Court.

2.7.
Mr Flowers explained to the Authority that his actions in April to June 2013

occurred in the context of difficult personal circumstances and pressures he was

under at the time. The Authority does not consider that Mr Flowers’ difficult

personal circumstances provide an adequate explanation or justification for his

misconduct.

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2.8.
The misconduct outlined at paragraph 2.5 occurred notwithstanding that Mr

Flowers had agreed to uphold high standards, as the Chair of Co-op Bank, as an

Approved Person and as a Methodist Minister. Mr Flowers has demonstrated

through his actions that he lacks the readiness and willingness to comply with

standards to which he is subject, including those of the regulatory system. As

such, he lacks the fitness and propriety required to operate in the financial

services industry.

2.9.
The Authority hereby makes an order pursuant to section 56 of the Act

prohibiting Mr Flowers from performing any function in relation to any regulated

activity carried on by any authorised or exempt persons or exempt professional

firm, on the grounds that he is not a fit and proper person.

2.10.
Mr Flowers has demonstrated an unwillingness to comply with the requirements

and standards of the regulatory system and with other legal, regulatory and

professional requirements and standards. Taken together, this pattern of

disregard for standards that he is expected to meet demonstrates a lack of

integrity.

2.11.
Mr Flowers’ failure to act with integrity and the attendant negative publicity,

which came to public attention after his departure from Co-op Bank, is such that

he does not have the requisite reputation to carry on functions in the financial

services industry. Any future involvement by Mr Flowers in the financial services

industry risks undermining consumer and market confidence.

2.12.
The regulatory action taken with respect to Mr Flowers supports the Authority’s

operational objective of protecting and enhancing the integrity of the UK

financial system. It underlines the importance placed by the Authority on those

in senior positions at authorised firms conducting themselves in a manner

consistent with the high standards expected of them.

3.
DEFINITIONS

3.1.
The definitions below are used in this Final Notice.

“the Act” means the Financial Services and Markets Act 2000.

“Approved Person” means a person in relation to whom the Authority or the PRA

has given its approval under section 59 of the Act (Approval for particular

arrangements) for the performance of a controlled function.

“the Authority” means the body corporate previously known as the Financial

Services Authority and renamed on 1 April 2013 as the Financial Conduct

Authority.

“Co-op Bank” means Co-operative Bank plc.

“Co-op Group” means Co-operative Group Limited.

“Corporate Governance Guidance” means the guidance referred to in paragraph

4.13 of this Notice.

“EG” means the Enforcement Guide.

“FIT” means the Fit and Proper Test for Approved Persons.

“NED” means Non-Executive Director.

“Tribunal” means the Upper Tribunal (Tax and Chancery Chamber).

4.
FACTS AND MATTERS

BACKGROUND

4.1.
Co-op Bank is a UK bank which provides high street and internet banking,

current accounts, mortgages, savings accounts, credit cards and loans to

individuals and businesses.

4.2.
Until 20 December 2013, Co-op Bank was a wholly-owned subsidiary of Co-

operative Banking Group, which in turn was a wholly-owned subsidiary of Co-op

Group. Co-op Group is one of the UK’s largest mutual businesses, owned by

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millions of UK customers. It is a registered society within England and Wales and

has interests across food, funerals, insurance and legal services.

4.3.
From 21 December 2013, Co-op Bank ceased to be a wholly-owned subsidiary of

Co-op Group, although Co-op Group continued to have an investment in the

bank until 2017.

The Co-op Bank Board

4.4.
The Board which Mr Flowers was appointed to Chair comprised 21 members

made up of 6 Executive and 15 NEDs. This was larger than Corporate

Governance Guidance at the time considered preferable. The consequence of a

large Board is the increased risk of an adverse impact on, among other things,

individual contributions, group dynamics, the ability of the Board to properly

discuss matters and the Board’s ability to perform its role properly.

4.5.
The Co-op Bank Board was made up of directors with banking and non-banking

backgrounds. It included sizeable representation from its sole shareholder at the

time, Co-op Group, whose members were typically elected to represent the

values and principles of the Co-operative and not necessarily because they

provided banking expertise.

Mr Flowers’ appointment as Chair of Co-op Bank

4.6.
In its capacity as the sole shareholder of Co-op Bank up until 20 December

2013, Co-op Group was responsible for appointing the Chair of Co-op Bank. On

15 April 2010 it appointed Mr Flowers as Chair of Co-op Bank and Deputy Chair

of Co-op Group. Mr Flowers had served as a NED on the Co-op Bank Board since

29 May 2009.

4.7.
Mr Flowers was a longstanding member of the Co-operative movement. He had

served in roles on Boards of a variety of co-operative, religious, local authority

and charitable organisations, including as Chair.

4.8.
Mr Flowers was one of four candidates for the role of Co-op Bank Chair. The

selection process conducted by Co-op Group consisted of a psychometric test

followed by an interview with the Co-op Group Chair and two other members of

the Co-op Group Board. A unanimous decision to appoint Mr Flowers was

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presented to the Co-op Bank and the Co-op Group Boards and approved by

both. The nature of the selection process underscored the importance that Co-

op Bank placed on the selection of its Chair. Mr Flowers recognised this,

describing the selection process as ‘rigorous and considerable.’

4.9.
During the period in which Mr Flowers was Chair of Co-op Bank, the Authority

did not approve the appointment of Chairs. It had previously approved Mr

Flowers to perform the CF2 Controlled Function (Non-Executive Director), which

he held from 29 May 2009 to 5 June 2013. Although there was no requirement

for the Authority to approve Co-op Group’s appointment of Mr Flowers as Chair,

the Authority had a clear interest in the governance of firms and engaging with

senior management; it therefore met with Mr Flowers in March 2010 to discuss

his prospective appointment.

4.10.
Following the March 2010 meeting, the Authority wrote to Co-op Bank and Mr

Flowers, noting that he would bring a diverse range of experiences to the Board

but that it would be beneficial for him as Chair to increase areas of his technical

banking knowledge.

THE REQUIREMENTS OF A CHAIR

4.11.
All people working in the UK financial services industry must maintain the

requisite standards of fitness and propriety to perform their roles. The Chair of a

bank holds a special position of trust and influence. Their honesty, integrity and

reputation, as well as their competence and capability, can have a significant

impact on their bank and upon confidence in the wider financial services

industry. The standards expected of Chairs are therefore necessarily of a high

order. In the case of Mr Flowers, this was reflected in various Corporate

Governance Guidance available over the period 2006 to 2012, as well as the

internal requirements that Co-op Bank placed on its Chair.

4.12.
The importance placed upon the role of Chair was set out in various Corporate

Governance Guidance that was publicly available at the relevant time. That

guidance took the form of voluntary codes of conduct, good practice, codes and

recommendations and did not constitute standalone legal or regulatory duties.

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Such guidance, however, provided a clear articulation of the standards expected

of a Chair.

4.13.
Examples of the relevant Corporate Governance Guidance, which included

standards of integrity, probity and ethical leadership, included:

(1)
Financial Reporting Council: Good Practice Suggestions from the Higgs

Report (June 2006);

(2)
Financial Reporting Council: The Combined Code on Corporate Governance

(June 2008);

(3)
A review of corporate governance in UK banks and other financial industry

entities – Final Recommendations (26 November 2009);

(4)
Financial Reporting Council: The UK Corporate Governance Code (June

2010);

(5)
Financial Reporting Council: Guidance on Board Effectiveness (March

2011); and

(6)
Financial Reporting Council: The UK Corporate Governance Code

(September 2012).

4.14.
The Corporate Governance Guidance recognised that a Chair was expected to

demonstrate the highest standards of integrity and probity. For example, the

Financial Reporting Council: Guidance on Board Effectiveness (March 2011)

stated that the Chair’s role included ‘demonstrating ethical leadership’ and also

that:

‘Good boards are created by good chairmen. The chairman creates the

conditions for overall board and individual director effectiveness.

The chairman should demonstrate the highest standards of integrity and

probity, and set clear expectations concerning the company’s culture,

values and behaviours, and the style and tone of board discussions.’

4.15.
Former Board members interviewed by the Authority underscored these

expectations. One said Mr Flowers was required to ‘set the tone from the top’

and, according to another, he was obliged to be a role model for fellow directors

and employees.

4.16.
The importance placed upon the role of Chair is also evident from the nature of

the Chair’s role and the high expectations of them. By way of illustration, the

(1)
stated that the Chair occupied a pivotal and wholly special position

between the Executives and NEDs in the leadership of the Board, playing a

central role in facilitating the important support and challenge by the

Board of management;

(2)
recommended that a Chair have the benefit of both relevant financial

industry experience and a track record of successful leadership capability

in significant Board positions. The Corporate Governance Guidance

emphasised the importance of the latter and stated that if a Chair lacked

relevant industry experience then an appropriate development programme

should be put in place; and

(3)
stated that the Chair was responsible for ensuring that directors received

accurate, timely and clear information and that they had sufficient time to

consider it for the purposes of performing their roles.

4.17.
In its Financial Statements Co-op Bank stated that, with limited exceptions not

relevant to this Notice, it considered itself compliant with the principles and

provisions of the Combined Code on Corporate Governance and the UK

Corporate Governance Codes.

Co-op Bank requirements

4.18.
Consistent with the expectations set out in the Corporate Governance Guidance,

Co-op Bank had specific and high expectations of its Chair. These were set out

in Co-op Bank’s internal policies, and confirmed publicly through its financial

statements (which were approved by the Board).

4.19.
Co-op Bank’s financial statements for the years ending 2010, 2011, 2012 and

2013 stated that the Board was responsible for setting the values and

governance standards for the Bank. Mr Flowers, as Chair, was responsible for

leading the Board in achieving its objective of setting those values and

standards. Co-op Bank placed responsibility on its Board, led by Mr Flowers, to

ensure that the Bank’s affairs were conducted and managed in accordance with

the Co-operative values and principles, which included acting in accordance with

the ethical values of honesty, openness, social responsibility and caring for

others.

4.20.
Co-op Bank Financial Statements also stated that the Chair was responsible for

leading the Board in the determination of its strategy and in the achievement of

its objectives. The Chair was personally responsible for organising the business

of the Board, ensuring its effectiveness and setting its agenda. The Chair was

also responsible for facilitating the effective contribution of directors and

constructive relations between the Executive and NEDs, and had responsibility

for ensuring directors received accurate, timely and clear information.

4.21.
In addition, Co-op Group and Co-op Bank had a number of internal policies

which contained standards that Mr Flowers was expected to meet. These

included:

(1)
The Code of Conduct for Directors. This Code contained requirements

relating to the personal conduct of directors. These included the

requirements that: (i) ‘Directors must not bring the [Co-operative] Society

into disrepute’; and (ii) ‘Directors must uphold the values of the [Co-

operative] Society’;

(2)
The Computer Use Policy, which included the requirements that: (i) ‘You

must not send emails or visual content that are illegal, obscene,

discriminatory, inaccurate, defamatory, derogatory or libellous’; (ii) ’You

must not send communications or visual content that discriminate, harass,

harm, offend or insult others…’; and (iii) ‘You must not use systems for

unlawful purposes including any criminal activity… ’; and

(3)
The Expenses Policy, which required mobile telephones to be used for

‘business purposes only.’ This requirement was set out in the policy in bold

capital letters.

MR FLOWERS’ CONDUCT: INTEGRITY AND REPUTATION

4.22.
Mr Flowers lacks the integrity and reputation required to work in the financial

services industry. His conduct shows that he disregarded and failed to comply

with the requirements and standards expected of him. This has been

demonstrated through Mr Flowers’:

(1)
use of his work mobile telephone in breach of the Expenses Policy;

(2)
use of his work email account in breach of the Code of Conduct for

Directors and the Computer Use Policy; and

(3)
conviction for possession of illegal drugs.

4.23.
Mr Flowers’ failings are particularly serious because:

(1)
the requirements and standards that Mr Flowers was subject to were

specific and known to him;

(2)
his failings span a significant period of time (namely 22 May 2011 to 7

May 2014) and demonstrate that Mr Flowers was unwilling to comply with

the requirements and standards of the regulatory system and with other

legal, regulatory and professional requirements and standards to which he

was subject;

(3)
Mr Flowers was in his own words ‘signally involved’ in the drawing-up of

the Code of Conduct for Directors. It was a Code drafted by the Co-op

Group’s Remuneration and Appointments Committee, which Mr Flowers

Chaired; and

(4)
the misconduct occurred notwithstanding that Mr Flowers had agreed to

uphold high standards both as an Approved Person and as a Methodist

Minister. In January 2017 Mr Flowers was removed from the list of

ministers of the Methodist Church after he admitted to ‘seriously impairing

the mission, witness or integrity of the Church.’

Work mobile telephone

4.24.
On nine separate occasions in the period 22 May 2011 to 16 June 2011, Mr

Flowers used his work mobile telephone for personal use to call a premium rate

chat line, in breach of the Expenses Policy. Mr Flowers received a formal warning

from Co-op Bank on 7 July 2011 about the telephone calls and was required to

repay the costs incurred.

4.25.
Mr Flowers admitted in interview with the Authority that the use of his work

mobile telephone in this manner was contrary to the terms of the Expenses

Policy and that his actions had been ‘foolish’.

Work email account

4.26.
Mr Flowers used his work email account in a manner that was inconsistent with

the high standards expected of him, as well as the specific internal Co-op Group

and Co-op Bank requirements of the Code of Conduct for Directors and the

Computer Use Policy. Mr Flowers’ disregard for the requirements to which he

was subject occurred notwithstanding that he had already been formally warned

about the inappropriate use of his work mobile telephone in 2011.

4.27.
On several occasions in the period 27 February 2012 to 22 November 2012 and

14 April 2013 to 5 June 2013 Mr Flowers used his work email account to send

and receive a number of inappropriate messages. The Authority has reviewed

emails to and from Mr Flowers’ work email account that contain sexually explicit

and otherwise inappropriate content. Mr Flowers accepted in interview with the

Authority that using his work email account in this manner was in breach of the

Computer Use Policy and the Code of Conduct for Directors.

4.28.
Mr Flowers also used his work email account to discuss the purchase, the taking

of and offering to provide to others, the following illegal drugs:

(1)
cocaine (classified by the Misuse of Drugs Act 1971 as a Class A drug);

(2)
gammahydroxybutrate or GHB (classified by the Misuse of Drugs Act 1971

as a Class C drug); and

(3)
ketamine (classified at the relevant time by the Misuse of Drugs Act 1971

as a Class C drug).

4.29.
Mr Flowers accepted in interview that using his work email account to discuss

purchasing, taking and offering to provide to others illegal drugs, as described

above, was in breach of the Computer Use Policy. Mr Flowers did not accept that

such conduct breached the provisions of the Code of Conduct for Directors.

However, the Authority considers that Mr Flowers’ conduct did breach the Code

of Conduct for Directors in that it brought the Co-operative Society into

disrepute.

Conviction for possession of illegal drugs

4.30.
On 7 May 2014, Mr Flowers was convicted for the possession of the following

illegal drugs:

(1)
cocaine (classified by the Misuse of Drugs Act 1971 as a Class A drug);

(2)
methamphetamine (classified by the Misuse of Drugs Act 1971 as a Class

A drug); and

(3)
ketamine (classified at the relevant time by the Misuse of Drugs Act 1971

as a Class C drug).

4.31.
The conviction related to an incident which occurred on 9 November 2013, after

Mr Flowers had left Co-op Bank and was no longer an Approved Person. It is

further evidence of Mr Flowers’ unwillingness to comply with the standards and

requirements expected of him (in this case under the criminal law). Taken

together with the conduct described above, it is further evidence that Mr Flowers

lacks a readiness and willingness to comply with the standards expected of him

(including those of the regulatory system).

Evidence provided by Mr Flowers and former Board members at

interview

4.32.
In interview with the Authority, Mr Flowers explained his conduct with respect to

the matters set out at paragraphs 4.26 to 4.29 by reference to the difficult

personal circumstances and pressures he was under at the time. In terms of his

use of his work email account, he said that during the period 2011 to 2013 he

did not have a personal email account. The Authority does not consider that this

offers an adequate explanation or justification for his conduct.

4.33.
Former Board members who the Authority interviewed were critical of Mr

Flowers’ conduct and considered that it had damaged Co-op Bank and the Co-

operative Society more generally. One said Mr Flowers’ conduct showed

‘recklessness’, describing his actions as ‘ridiculous’ and being ‘a million miles

away from the values of the Co-operative Society.’ Mr Flowers’ conduct was

particularly damaging as it ‘contradicted the strong ethical image of the Bank.’

5.
FAILINGS

5.1.
The regulatory provisions relevant to this Final Notice are referred to in Annex A.

5.2.
FIT 1.3.1G states that the Authority will have regard to a number of factors

when assessing the fitness and propriety of a person.

5.3.
FIT 1.3.1B G states that the most important considerations will be the person’s:

(1)
Honesty, Integrity and Reputation;

(2)
Competence and Capability; and

(3)
Financial Soundness.

5.4.
As a result of the facts and matters described above, Mr Flowers’ conduct has

fallen short of the minimum regulatory standards and the Authority considers he

is, therefore, not fit and proper because he lacks the requisite integrity.

5.5.
Mr Flowers’ conduct demonstrates a lack of integrity as he:

(1)
used his work mobile telephone in breach of the Expenses Policy;

(2)
used his work email account in breach of the Code of Conduct for Directors

and the Computer Use Policy; and

(3)
was convicted for possession of illegal drugs.

5.6.
This misconduct occurred notwithstanding that Mr Flowers had agreed to uphold

high standards as the Chair of Co-op Bank, as an Approved Person and as a

Methodist Minister. The nature of Mr Flowers’ conduct demonstrates a disregard

for standards and requirements that he is expected to meet, and evidences that

Mr Flowers is not ready and willing to comply with the requirements and

standards of the regulatory system.

5.7.
Mr Flowers’ failure to act with integrity and the attendant negative publicity,

which came to public attention after his departure from Co-op Bank, is such that

he does not have the requisite reputation to carry on functions in the financial

services industry. Any future involvement by Mr Flowers in the financial services

industry risks undermining consumer and market confidence.

6.
SANCTION

6.1.
The Authority considers that it is both necessary and appropriate to prohibit Mr

Flowers from performing any function in relation to any regulated activity carried

on by any authorised person, exempt person or exempt professional firm, to

protect and enhance the integrity of the UK financial system.

6.2.
The Authority has had regard to the guidance in Chapter 9 of EG in deciding that

it is appropriate to make a Prohibition Order in this case.

6.3.
The Authority hereby makes a Prohibition Order pursuant to section 56 of the

Act prohibiting Mr Flowers from performing any function in relation to any

regulated activity carried on by any authorised or exempt person or exempt

professional firm.

7.
PROCEDURAL MATTERS

7.1.
This Notice is given to Mr Flowers under and in accordance with section 390 of

the Act. The following statutory rights are important.

Decision maker

7.2.
The decision which gave rise to the obligation to give this Notice was made by

the Settlement Decision Makers.

7.3.
Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of

information about the matter to which this notice relates. Under those

provisions, the Authority must publish such information about the matter to

which this notice relates as the Authority considers appropriate. The information

may be published in such manner as the Authority considers appropriate.

However, the Authority may not publish information if such publication would, in

the opinion of the Authority, be unfair to you or prejudicial to the interests of

consumers or detrimental to the stability of the UK financial system.

7.4.
The Authority intends to publish such information about the matter to which this

Final Notice relates as it considers appropriate.

Authority contacts

7.5.
For more information concerning this matter generally, contact Nicholas Hills at

the Authority (direct line: 020 7066 4162/email: nicholas.hills@fca.org.uk).

Financial Conduct Authority, Enforcement and Market Oversight Division

ANNEX A

RELEVANT STATUTORY PROVISIONS

1.
The Authority’s operational objectives established in section 1B of the Act

include the operational objective (amongst others) to protect and enhance the

integrity of the UK financial system.

2.
Section 56 of the Act provides that the Authority may make an order prohibiting

an individual from performing a specified function, any function falling within a

specified description or any function, if it appears to the Authority that that

individual is not a fit and proper person to perform functions in relation to a

regulated activity carried on by an authorised person, exempt person or a

person to whom, as a result of Part 20, the general prohibition (in s19 of the

Act) does not apply in relation to that activity. Such an order may relate to a

specified regulated activity, any regulated activity falling within a specified

description, or all regulated activities.

RELEVANT REGULATORY PROVISIONS

3.
The part of the Authority’s Handbook entitled ‘The Fit and Proper Test for

Approved Persons’ (FIT) sets out the criteria that the Authority will consider

when assessing the fitness and propriety of a candidate for a controlled function.

FIT is also relevant in assessing the continuing fitness and propriety of an

Approved Person.

4.
FIT 1.3.1 G states that the Authority will have regard to a number of factors

when assessing the fitness and propriety of a person. FIT 1.3.1 B G states that

the most important considerations will be the person’s honesty, integrity and

reputation, competence and capability, and financial soundness.

5.
The matters to which the Authority will have regard in determining a person’s

honesty, integrity and reputation include whether a person demonstrates a

readiness and willingness to comply with the requirements and standards of the

regulatory
system
and
with
other
legal,
regulatory
and
professional

requirements and standards (FIT 2.1.3G (13)).

The Authority’s policy for exercising its power to make a Prohibition

6.
The Authority’s policy in relation to Prohibition Orders is set out in Chapter 9 of

EG.

7.
EG 9.1.1 states that the Authority may exercise this power where it considers

that, to achieve any of its statutory objectives, it is appropriate either to prevent

an individual from performing any functions in relation to regulated activities or

to restrict the functions which he may perform.

8.
EG 9.2.2 states that the Authority has the power to make a range of Prohibition

Orders depending on the circumstances of each case and the range of regulated

activities to which the individual's lack of fitness and propriety is relevant.

Depending on the circumstances of each case, the Authority may seek to

prohibit individuals from performing any class of function in relation to any class

of regulated activity, or it may limit the Prohibition Order to specific functions in

relation to specific regulated activities. The Authority may also make an order

prohibiting an individual from being employed by a particular firm, type of firm

or any firm.

9.
EG 9.3.3 states that the FCA may have regard to the cumulative effect of a

number of factors which, when considered in isolation, may not be sufficient to

show that the individual is not fit and proper to continue to perform a controlled

function or other function in relation to regulated activities.

10.
EG 9.5.1 states where the Authority is considering making a Prohibition Order

against an individual other than an individual referred to in EG 9.3.1 to 9.3.7,

the Authority will consider the severity of the risk posed by the individual, and

may prohibit the individual where it considers this is appropriate to achieve one

or more of its statutory objectives.

11.
EG 9.5.2 states when considering whether to exercise its power to make a

Prohibition Order against such an individual, the Authority will consider all the

relevant circumstances of the case. These may include, but are not limited to,

where appropriate, the factors set out in EG 9.3.2. The factors set out in EG

9.3.2 that the Authority considers are most relevant to Mr Flowers are:

(1)
whether the individual is fit and proper to perform functions in relation to

regulated activities, including whether the individual has the requisite

honesty, integrity and reputation (FIT 2.1) (EG 9.3.2(2));

(2)
the relevance and materiality of any matters indicating unfitness (EG

9.3.2(5)); and

(3)
the severity of the risk which the individual poses to consumers and to

confidence in the financial system (EG 9.3.2(8)).